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On the 2 July 2018, the UK signed new tax treaties with Jersey, Guernsey and the Isle of Man.

The treaties are very similar to each other, incorporating measures reflecting the outcomes of the Base Erosion and Profit Shifting project promoted by the G20 countries and the OECD. The treaties are likely to come into effect once each jurisdiction has completed their parliamentary processes and exchanged written notes – this is expected to be early in 2019.

Some of the key amendments include:

  • determination of corporate residency, which will be agreed by the signatories’ competent authorities, rather than determined by the place of management as it is it currently
  • an amended definition of permanent establishment and the corresponding allocations of profits
  • the elimination of double taxation of dividends, interest and royalties where the income is beneficially owned by a resident of the other contracting state, for certain classes of resident: for interest and royalties. This includes listed companies traded on recognised stock exchanges and companies where less than 25 per cent of the shares or rights are owned by persons outside that territory. The double taxation clauses do, however, differ between Jersey, Guernsey and the Isle of Man
  • a principal purpose test for treaty benefits
  • assistance with the collection of taxes
  • the provisions for information exchange on request.

For further information please do not hesitate to contact Frank Strachan – Head of Tax, or a member of the Edwin Coe Senior Tax team, Sean Bannister, Hetal Sanghvi and Andrew Terry.

Edwin Coe LLP is a Limited Liability Partnership, registered in England & Wales (No.OC326366). The Firm is authorised and regulated by the Solicitors Regulation Authority. A list of members of the LLP is available for inspection at our registered office address: 2 Stone Buildings, Lincoln’s Inn, London, WC2A 3TH. “Partner” denotes a member of the LLP or an employee or consultant with the equivalent standing. This guide concerns the law in England and Wales and is intended for general guidance purposes only. It is essential to take specific legal advice before taking any action.

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